UK carmakers in slow lane for Brussels funds
Publication date: 11 March 2009
Only two UK-based car manufacturers have applied for European-backed funding, fuelling concerns the British sector is being slow to seek support, according to FT analysis.
Lord Mandelson, the business secretary, will on Wednesday host a summit with the beleaguered sector and banks, in an attempt to kick start aid under the government’s £2.5bn ($3.2bn) auto support package. This includes £1.3bn of guarantees to back loans from the European Investment Bank and £1bn of guarantees for other loans.
Ministers are understood to be concerned that UK-based companies are being slow to seek funding from Brussels, in spite of complaining at the perceived slow pace of government initiatives. But companies told the FT they had been forced to wait for Wednesday’s meeting to learn details of the government package.
The Department for Business, Enterprise and Regulatory Reform is to encourage large manufacturers to apply for EIB loans, as well as explaining the criteria for the UK guarantees.
Ministers do not want UK-based companies to miss out on their share of the limited pool of European funding. The EIB this week warned that its loans to carmakers were unlikely to exceed €7bn (£6.5bn), significantly less than the €40bn the industry had sought.
Nissan and Jaguar Land Rover have both applied for EIB financing to support research and development work. Jaguar said it was waiting for Wednesday’s meeting to get details of the non-EIB guarantees. Neither General Motors nor Ford Motor had yet applied for EIB-backed loans in the UK, the companies said.
Ford which has a technical centre in Dunton, Essex, and builds fuel-efficient diesel engines in Dagenham, Essex and petrol engines at Bridgend, Glamorgan, said it was looking at how the company might use the funds.
The government will this week hold further discussions with GM, while awaiting its formal request for help. Gordon Brown is expected to discuss the issue when he meets Angela Merkel, the German chancellor, for informal talks at the weekend.
Other companies are still weighing up whether to seek European or government help for their UK arms. Toyota said it “started discussions” with the EIB in Luxembourg last week and did “expect to be submitting something in the future”. But it had different projects around Europe, and had not decided on whether to seek EIB funding in the UK.
Honda said it backed industry-wide calls for government measures to help stimulate demand but would not be applying for EIB loans because of its policy of being “apolitical and not accepting grants”. Bentley, owned by Germany’s Volkswagen, and Aston Martin said they were waiting to learn the criteria package before deciding whether to apply. Rolls-Royce, owned by BMW, said it did not need to apply for state financing.
Source: The Financial Times